How Big Oil will stop children from driving electric cars?

Electric cars produce up to 75% less carbon. But the chances are I am not going to get one, and nor are my children. Photograph: Vincent Kessler/Reuters.

I would like an electric car. It would be quieter, nicer to drive and cheaper to run than my petrol car, and it could produce up to 75% less CO2. But the chances are I am not going to get one, and nor will my children when they grow up.

One reason is that the Department for Transport can no longer afford to help me buy one. The government has allocated £43m to subsidise ultra-low-carbon cars, but at £5,000 a car that's only enough to help the first few thousand of us who switch over. So whether or not I end up with an electric car doesn't have a great deal to do with consumer subsidies.

Instead, the issue for the government to think about is refuelling. Not how to refuel an electric car, as the standards are already emerging for that, but where? At present, we fill up our cars at petrol stations where we are customers of the oil industry. But with electric cars, we would charge our batteries at home, probably on a low-cost, overnight rate. We would pay through our existing utility bills, and we might never go to petrol stations again.

A lot of money is at stake. In the UK alone, filling up cars with petrol is worth over £1bn in annual, after-tax profits to the oil industry, or about £450 a car over a 10-year lifetime. In contrast, BMW last year made about £150 after tax on each new car it sold. So for the time being at least there is more money in filling up cars than in building them, even at the top end of the market.

This is where the problem lies. For electric cars to become a reality, large parts of the refuelling market will have to change hands, and if we all switch to electric cars, the oil companies stand to lose everything. So as their shareholders would expect, they are investing heavily to avoid this outcome.

The focus is on technologies which compete with electrification, especially biofuels. BP has spent $100m this year acquiring a North American ethanol business, and will spend another $250m on a production plant. Exxon Mobil has a budget of $600m to make motor fuel from algae and Shell is making "biogasoline", a direct replacement for petrol, from sugar beet. Many experts believe biofuels are a second best solution, environmentally, but that is not the point: biofuels are attractive to oil companies because ultimately they will be sold at petrol stations. So they help the industry hold on to its relationship with the driving public, and its role in the refuelling market.

A similar logic applies to hydrogen cars, and even to hybrids. Most of today's hybrids can't actually be plugged in to a power outlet, so are really just very efficient petrol cars. Even the next generation of hybrids will still run on petrol much of the time: the plug-in version of the Toyota Prius, for example, has an electric range of about 13 miles, and 30-40% of the miles we drive are outside this range. So hybrid technologies are attracting some investment from the oil industry too.

The effect of these investments is subtle: they weaken the case for electric cars, by slightly improving the outlook for the alternatives. And this is all the industry needs to achieve, because contrary to popular imagination the goal is not to kill the electric car, just to slow it down a bit.

Peter Voser, the chief executive of Shell, has explained the logic: he believes that 40% of vehicles will be electric in 40 years' time, but over the same period the global vehicle park will grow from 1 to 2bn cars in total. So there will still be 200m more petrol cars (and hybrids) in 2050 than there are today. In this scenario the oil companies have plenty of time to diversify their interests – but, as is also obvious, there will be no reduction in total carbon emissions.

Of course, the outcome could be different if government were to play its hand more strategically. Instead of throwing money at consumers, and at the manufacturing industry, legislation could be used to introduce a supplier obligation for petrol retailers, requiring anyone with a traditional filling station also to offer a free, fast charging or battery switching service. A supplier obligation of this type already exists for the energy utilities, called the Carbon Emissions Reduction Target, and funds around £1bn of residential energy-saving projects every year. So the model exists and the government knows how to implement it.

Yet to introduce this kind of legislation, ministers would have to go into the ring with Big Oil, and there is only one country in the world where politicians are sufficiently motivated to take on that challenge. In Israel, where energy independence is a matter of national security rather than environmentalism, a charging infrastructure is already under development and electric vehicles will be a reality within five to 10 years, not within 30 or 40 years as the oil industry would like.

What the Israeli project shows is that the technology for electric cars is available now, if the political will can be found to match it. But in the UK, as we embark on an era of coalition politics, some kind of compromise seems somehow more likely. So I expect that when my children grow up, they will be driving compromise cars – and the other word for compromise, of course, is hybrid.